RE: $25M 2007 DRILL PLAN"that is Production and save the $25 M for later and time to do it coincident with production......and thereby, minimize short term dilution."
PAX cannot go into production, since they cannot get financing. More precisely, they cannot get good financing (according to Harlan’s standard). Let me give you the two options. (Assuming every piece of news issued by the company is true. The whole project needs 800 million dollar financing.)
1. 30% equity financing, and 70% bank financing. At today share price, they need to issue 350 million shares, in order to meet there 30% obligation. Without the 30% equity financing firmly in place, bank will not give them a dime.
2. JV: As rumor goes, it went as high as 250 million dollars plus for 70% of project. However, Harlan will not go for that, since he will be pushed aside with such deal.
So, are Harlan open for any deals? Yes, he, just like TG has posted, wants to sell 10% to 20% of the project for X million dollars. However, as people look at Yukon Zinc, they know that giving him money without taking control away from him is pure stupidity.
Yukon Zinc is facing the same problem. The worst part of Yukon Zinc is that there are 300 million shares floating and Harlan has no way to put it into production.
Whoever he asked, give him worse deal than the deal proposed to him a year ago. Why? “There were no reputation risks of working with YZC a year ago. But, there is now.” Today, if any CEO presents a JV partner with YZC to the board, there will be at least one director saying things such as, “knowing what happened to Yukon Zinc, knowing the reputation of Harlan, why do we do business with him, when there are so many others around.” Essentially, the only deals available for YZC are from private family owned mining company in Asia. Yes, they have the money and most time have one boss decide everything. But, those companies are not easy to do business with, if I can put it in the mildest term.
At this moment, the question is as following? Is Harlan going to see the reality and get into a deal, which will benefit the share holders? Or, is he going to take the same approach as he took with YZC -- keep going, while wishing for the miracle, or as someone put it, the angel from the east, or as I would put it, the idiot from the east.
Harlan is more like a teenage mother with her baby. Is he going to give up the baby for the good of both? Or is he going to ruin everyone?
Some may ask? If the 70% of stake worth 250 millions, then the 30% stake left should only worth 110 millions. Then, the share price will be about 1 dollar plus, after considering cash and other asset on the book. If one has enough experience with market, one will see that the downside risk is gone with such announcement. So, I would be surprised, if it did not propel PAX over 2 dollars within a month.
Do I expect Harlan selling 70% of the project? No. So, why am I here? I expect YZC will get into trouble within six months to a year. Then, the troubles with YZC opens the door for takeover or proxy fight on PAX with Harlan, who is deeply tarnished, vulnerable, and disoriented by YZC money problem. I smelled the blood.
What is the trade? Buy low and sell high. Higher stock price will only encourage Harlan to do stupid things. Lower price certainly will encourage some one take a bite at the company. Buy and hold is not the right strategy for this stock.